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In studying the data for my latest Big Four Economic Indicators update, I
wondered how much impact Hurricane Sandy might have had on the
economy in October and what to expect in the months ahead. I
thought it would be interesting to take a close look at the
behavior of the Big Four in the months before and after Hurricane
Katrina hit the coast in August 2005.

Here is a chart and table similar to the one I maintain for the
current Big Four data. The chart illustrates the growth of the
four indicators from January 2005 to June 2007. The table below
shows the month-over-month percent change and the average of the
four for the twelve months of 2005.

The two made landfall at the end of the month Katrina on August
29th and Sandy on October 29th. Both had effects on economic
activity as they approached the US. Katrina certainly had some
impact on the August data and substantial impact on the September
data for all four indicators, most conspicuously Industrial
Production. But we can see that Industrial Production had
essentially rebounded by November and was back on trend by the
end of the year. Retail Sales took a storm-related dip, but this
series is such a volatile indicator that it's impossible to
speculate with any confidence what the green line in the chart
above would have looked like had Katrina never happened.

For the sake of comparison, here is my current chart for the same
indicators.

Presumably we have already seen some of Sandy's fingerprints on
the three October indicators thus far released, and we should
expect to see greater impact on the November data. But the
gradual return to normal in the North East and economic stimulus
from recovery efforts should limit the Sandy effect to a couple
of months.